TMI Blog2024 (2) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... co-operative society the assessee is entitled for the exemption on the interest earned on the deposits. Thus allowability of deduction of interest u/s. 80P(2)(d) decided in favour of assessee. - Dr. S. Seethalakshmi, Jjudicial Member And Shri Rathod Kamlesh Jayantbhai, Accountant Member For the Appellant : Sh. Amit Kothari, CA For the Respondent : Ms. Nidhi Nair, Sr. DR ORDER PER BENCH These six appeals filed by assessee are arising out of the order of the National Faceless Appeal Centre, Delhi dated 08.06.2023, 09.06.2023, 12.06.2023 13.06.2023 [here in after NFAC ] for assessment years 2015-16, 2013-14, 2018-19, 2020-21, 2017-18 2016-17 2. Since the issues involved in these appeals are almost identical on facts and are almost common, except the difference in figure, therefore, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA No. 247/Jodh/2023 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 P (2) (d) has been allowed to the assessee in the preceding years as well as in the subsequent years. The deduction claimed u/s 80P(2)(d) has been disallowed in the intimation issued u/s 143(1) of the IT Act. The assessee filed a rectification application u/s 154 of the IT Act to allow the deduction u/s 80P(2)(d) but the department has passed the order u/s 154 rejecting the rectification application for allowing deduction u/s 80P(2)(d). The assessee filed an appeal against the order passed u/s 154 of the IT Act and the deduction claimed has been allowed by the CIT (A) in his order dated 26/07/2018. 5.1 Subsequently the assessee has been again issued notice u/s 154 of the IT Act on 15.09.2021 by the ld. AO for disallowing deduction claimed u/s 80P (2)(d) of the IT Act. In response to which the assessee has filed its reply objecting to the initiation of proceedings u/s 154 of the IT Act as the deduction had been already allowed by the Appellate Authority and as such the learned AO was not having proper jurisdiction to rectify the order u/s 154 of the IT Act. However, the learned AO has passed order u/s 154 of the IT Act by disallowing the deduction claimed u/s 80P (2)(d) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of tax cannot be said to be prejudicial to the interests of the Revenue. If two views are possible, and the AO has adopted one of those views, the order of assessment cannot be prejudicial to the interests of the Revenue. However, when the Assessing Officer does not apply his mind to the issue at hand or violates any of the principles of natural justice, the order shall be prejudicial to the interests of the Revenue. Also, an incorrect assumption offacts or incorrect application of law by the AO would make the order of assessment erroneous and prejudicial to the interests of the Revenue. 9. The Hon'ble Supreme Court in the case of the The Totgars Cooperative Sale Society Ltd. Vs. ITO 322 ITR 283 (SC) held that Income from utilization of surplus funds was taxable under the head income from other sources, and therefore not eligible for deduction u/s 80P. The Hon'ble Kamataka High Court in case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO (230 Taxman 309), was dealing with a case where deduction u/s. 80P(2)(a) (i) of the Act was claimed on interest from the deposits made in a nationalized bank out of the amounts which was used by the assessee for providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 80P(2)(a)(iii) of the Act. Therefore in the facts of the said case, the Apex Court held the assessing officer was right in taxing the interest income indicated above under Section 56 of the Act. The Court also observed that even the Hon'ble Supreme made it clear that they are confining the said judgment to the facts of that case. The Court therefore concluded that Hon'ble Supreme Court was not laying down any law, Similar view taken in Guttigedarara Credit Co-operative Society Ltd. VS. ITO (2015) 377ITR 464 (Karnataka). In t the case of PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHER VS. TOTAGARS CO- OPERATIVE SALE SOCIETY 392 ITR 0074 (Karn) in the context of deduction u/s. 80P(2)(d) of the Act, it was held that Sec. 80P(2)(d) of the Act allows deduction in respect of any income by way of interest or dividends derived by the co- operative society from its investments with any other cooperative society, the whole of such income. The Hon'ble Court held that that the aforesaid Supreme Court's decision in the case of Totgars (supra), was not applicable to deduction u/ 80P(2)(d) of the Act, because the said decision was rendered with regard to deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e chargeable to tax under the head income from other sources and therefore there was no question of allowing deduction u / s 80P(2)(d) of the Act. The following points can be culled out from the aforesaid decision: 1. What Section 80P(2)(d) of the Act, which was though not specifically argued and canvassed before the Hon'ble Supreme Court, envisages is that such interest or dividend earned by an assessee cooperative society should be out of the investments with any other cooperative society. The words 'Co-operative Banks' are missing in clause (d) of subsection (2) of Section 80P of the Act. Even though a co- operative bank may have the corporate body or skeleton of a cooperative society but its business is entirely different and that is the banking business, which is governed and regulated by the provisions of the Banking Regulation Act, 1949. Only the Primary Agricultural Credit Societies with their limited work of providing credit facility to its members continued to be governed by the ambit and scope of deduction under Section 80P of the Act. (Paragraph 13 of the Judgment). 2. The banking business, even though run by a Co-operative bank is sought to be exclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollow the same in the face of the binding precedent laid by the Hon'ble Supreme Court. The Hon'ble Court observed that in paragraph 8 lof the said order passed by a coordinate bench that the learned Judges have observed that chithat INCOME ARTMEN the issue whether a co-operative bank is considered to be a co- operative society is no longer res integra, for the said issue has been decided by the Income Tax Appellate Tribunal itself in different cases . No other binding precedent was discussed in the said judgment. Of course, the Bench has observed that a Co-operative Bank is a specie of the genus co- operative Society, with which we agree, but as far as applicability of Section 80P(2) of the Act is concerned, the applicability of the Supreme Court's decision cannot be restricted only if the income was to fall under Section 80P(2)(a) of the Act and not under Section 80P(2)(d) of the Act. (Paragraph-18 of the Judgment) 6. The Court finally concluded that it would not make a difference, whether the interest income is earned from investments/deposits made in a Scheduled Bank or in a Co-operative Bank. Therefore, the said decision of the Co-ordinate Bench is distinguis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch investments, cannot fall within the meaning of the expression profits and gains of business and that such interest income cannot be said to be attributable to the activities of the society, namely, carrying on the business of providing credit facilities to its members or marketing of agricultural produce of its members. The court has held that when the assessee society provides credit facilities to its members, it earns interest income. The interest which accrues on funds not immediately required by the assessee for its business purposes and which been invested in specified securities as investment are ineligible for under section 80P(2)(a)(i) of the Act. (Paragraph-13 of the Judgment) 13. It can thus be seen that the ratio laid down by the Hon'ble Karnataka High Court in the case of Totagars Cooperative Sales Society in 395/TR 611 (Karn) is that in the light of the principles enunciated by the Supreme Court in Totgars Co- operative Sale Society (supra), in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act. However, section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80P(2)(a)(i) of the I.T. Act in respect of interest income earned from investments with banks. Accordingly, Ground No.2 of the appeal is dismissed. 7. As the assessee did not find any relief from the order of the ld. CIT(A) and feeling dissatisfied with the order of the ld. CIT(A) the present appeal has been preferred on the grounds as raised by the assessee as reiterated here in above solely challenging the deduction denied claimed u/s. 80P(2)(d) of the Act. To support the various grounds so raised by the assessee, the ld. AR appearing on behalf of the assessee submitted that the assessee is a co-operative society registered under the Societies Act and he has placed his fund under the another co-operative societies. Therefore, since the assessee is not engaged or directly or indirectly in the banking services, the interest received by the assessee being the credit co-operative society invested their ideal fund into another cooperative society clearly covered under the provisions of section 80P(2)(d) of the Act and therefore, the denial of said exemption is on wrong appreciation of facts and therefore, the appeal of the assessee having similar set of facts on various assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO which was available to him at the time of original assessment. Troikaa Pharmaceuticals Ltd. Vs. ACIT (2023) 7 NYP CTR 1472 (Guj) Reassessment Full and true disclosure Validity vis-a-vis opportunity of being heard Reopening was based on the very same records which were placed at the time of the original assessment Details regarding the issue under consideration was already examined by the then AO for which a specific query was raised and therefore it was not open for the AO to reopen the same or revisit his opinion because of a change of opinion Objections were disposed of after over a year by an order passed on 31st Aug., 2021 which indicates that there was a clear case of procedural violations It is not the case of the authority that there was a failure to fully and truly disclose all facts that led to the escapement of income so as to warrant an exercise of reassessment under s. 148 Further, the order was passed in gross violation of principles of natural justice Reopening was not therefore sustainable Sun Pharmaceutical Industries Ltd. Vs. DCIT (2023) 7 NYPCTR 1267 (Guj) Reassessment Full and true disclosure Reason to believe Not based on new fresh t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, we are afraid, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The AO has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AO. Hence, after 1st April 1989, the AO has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to s. 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asian Paints Ltd. Vs. DCIT (2019) 261 Taxman 380 (Bom) ✓ Navkar Share Stock Brokers P. Ltd. Vs. ACIT (2017) 393 ITR 362 (Guj) ✓ Meghmani Energy LTd. Vs. DCIT (2016) 389 ITR 281 (Guj) ✓ Shriram Foundry Ltd vs. DCIT (2012) 250 CTR (Bom) 116 ✓ Sound Casting Pvt Ltd vs. DCIT (2012) 250 CTR (Bom) 119 ✓ CIT vs. Steel Tubes of India Ltd. (2010) 326 ITR 46 (MP) ✓ Prashant Projects Ltd. vs. ACIT (2011) 333 ITR 368 (Bom) Approval granted by PCIT was in an mechanical manner. ✓ Kartik Suresh Chandra Gandhi vs. ACIT (2023) 7 NYPCTR 1115 (Bom) ✓ Sagar Bullion P. Ltd vs. UOI (2022) 444 ITR 686 (Bom) The appellant has received interest from other co-operative banks on which deduction was claimed u/s 80P(2)(d). The appellant had received interest from Udaipur Central Co-Operative Bank, The Rajasamand Urban Co- Operative Bank and Udaipur Mahila Urban Co-Operative Bank. Such interest received from other Co-Opperative Societies is exempt u/s 80P(20(d) of the Act. The appellant had submitted the registration certificate of all the above Banks under the Rajasthan Co-Operative Societies Act during the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r received the income from the Co-operative Bank and as per the provisions of the Income Tax Act any income received from the Co-operative Bank is not eligible for deduction under Section 80P(2)(d) of the Act. Further, he contended that the Reserve Bank of India also granted permission to carry on the business of banking activities with the entity wherein a Co-operative Society made an investment and to receive the interest from the investment since the RBI had granted the Banking license to the Co-operative Banks. Thus, according to the respondent, the Co-operative Bank lost the status as an entity of Co-operative Society as it would provide the services not only for the members of a Co-operative society but to other general public as well. So taking into consideration of this aspect, the Assessing Officer passed the impugned notices, stating that any interest amount received from the investment made in a Co-operative Bank by a Co-operative Society, is not entitled for deduction under Section 80P(2)(d) of the Act. 5. In support of his contentions, he referred to a judgment of the Hon'ble Supreme Court in The Totagars Cooperative Sale Society -Vs- Income Tax Officer, Karnat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; under Section 2(19) as follows: 2(19). Co-operative society means a co-operative society registered under the Co- operative Societies Act, 1912 (2 of 1912 ), or under any other law for the time being in force in any State for the registration of co- operative societies. 10. A reading of the above definition would make it clear that 'Co-operative Society' means a Co-operative Society registered under Co-operative Societies Act, 1912. Thus, a Co-operative Society referred therein is only a cooperative society as defined under the Act, be it a Co-operative Society carrying on banking business or Co-operative Society carrying on the other businesses or a Co-operative bank. 11. The learned counsel for the respondent referred to the judgment of the Hon'ble Supreme Court rendered in Totgars Cooperative Sale Society Ltd., v. Income-tax Officer, Karnataka , wherein the issue came up for consideration as to whether the interest income received by a Co-operative Bank from its members by way of providing the credit facilities to its members is eligible for deduction or not. Ultimately the Hon'ble Surpeme Court found that under Section 80P(2)(a)(i), the same is eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for violation of s. 80P(2)(d) Addition as income from other sources by placing restriction under s. 80P(4) Not correct Co-operative Bank wherein the assessee deposited out of its surplus funds for earning interest Then, the only interest was earned by the assessee on the deposit would be eligible for deduction under s. 80P(2)(d) Interest of investment related to co- operative society, the assessee is eligible for deduction under s. 80P(2)(a)(i) Kot Ram Dass Coop. Thrift Credit Society Ltd. vs. ITO (ITA No. 86/Asr/2021, dt. 13th June, 2023) followed. The Kot Ram Dass Co Operative Thirft Credit Society Ltd. vs. ITO (2023) 37 NYPTTJ 864 (Asr) Deduction under s. 80P(2)(d) Allowability Interest earned from deposits in co-operative banks Sec. 80P(2)(d) allows whole deduction of income by way of interest or dividend derived by a Co-operative Society from its investments with any other co-operative society This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by co-operative society from in its investment with a co-operative society Therefore, the investment of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities to members Applicability of s. 80P(4) AO cannot be said to be going behind any registration certificate when he engages in a fact-finding enquiry as to whether the co-operative society concerned is in fact providing credit facilities to its members Such fact finding enquiry would entail examining all relevant facts of the co-operative society in question to find out whether it is, as a matter of fact, providing credit facilities to its members, whatever be its nomenclature Expression providing credit facilities to its members does not necessarily mean agricultural credit alone Sec. 80P(2)(a)(i) must be contrasted with s. 80P(2)(a)(iii) to (v), which expressly speak of agriculture Once the cooperative society is providing credit facilities to its members, the fact that it is also providing credit facilities to non-members does not disentitle the society from availing of the deduction However, since profits and gains from credit facilities given to non-members cannot be said to be attributable to the activity of providing credit facilities to its members, such amount cannot be deducted Limited object of s. 80P(4) is to exclude co-operative banks that function at par with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Computation Gross or net interest income Sec. 80P(2)(d) allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other cooperative society It is immaterial whether any interest paid to the cooperative society exceeds the interest received from the bank on investments The Revenue is not required to look to the nature of investment whether it was from its surplus funds or otherwise The Act does not speak of any adjustment as sought to be made out by the counsel for the Revenue Tribunal was right in law in allowing deduction under s. 80P(2)(d) in respect of interest of Rs. 4,90,919 on account of interest received from N Central Co-operative Bank without adjusting interest paid to the bank. CIT v/s UP Co-operative Sugar Factories (2013) 219 TAXMAN 0033 (Allahabad) Deduction under s. 80P(2)(d) Computation Gross income or net income Deduction under s. 80P(2)(d) is allowable to assessee cooperative society only on net income by way of interest received from cooperative societies/banks after deducting expenditure debited to P L a/c relatable to earning of such income CIT vs. Rajasthan Rajya Sahkari Upbh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 3229 3230/Mum/2022, dt. 23rd Feb., 2023) followed Merwanjee Cama Park Co Operative Housing Society Ltd. vs. ITO (2018) 62 ITR_Trib 770 (Mumbai) Deduction under s. 80P(2)(d) Assessee a cooperative society Applicability of sub-s. (4) to s. 80P inserted by the Finance Act, 2006 By sub-s. (4) of s. 80P, deduction had been withdrawn in the case of co-operative banks and not co-operative societies Assessee being a cooperative society and not a cooperative bank, was entitled to deduction under s. 80P(2)(d) with respect to the income earned on the deposits made with other co-operative banks. ITO vs. Bhilwara Zila Dugdh Utpadak Sahkari Sang Ltd. (2023) 37 NYPTTJ 1453 (Jodh) Deduction under s. 80P(2)(d) Interest income Interest received from regional rural bank and Central cooperative bank CBDT Circular No. 61201 F. No. 273(3) 144/2009-IT(A-1), dt. 20th Sept., 2010, has clarified that regional rural banks (RRB) are not eligible for deduction under s. 80P from asst. yr. 2007-08 onwards Circular No. 319, dt. 11th Jan., 1982 which says that an RRB is a co-operative society stands withdrawn w.e.f. asst. yr. 2007-08 Further, s. 80P has been amended and a new sub-s. (4) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed consistently in the past. Volkart Brothers 82 ITR (SC) 50 is the landmark decision on the scope of section 154 which says that where any decision is to be drawn on the basis of long drawn reasoning the same would not be subject matter of 154 proceedings. A decision on a debatable point of law is not a mistake apparent from the record. A look at the records must show that there has been an error and that error may be rectified; Reference to documents outside the records and the law is impermissible when applying the provisions of section 154. CIT v Keshri Metal Pvt. Ltd. (1999) 237 ITR 165 (SC)]. Mistake means commission that is not designed and which is obvious and something which has no two opinions or which is debatable. CIT V Lakshmi Prasad Lahkar (1996) 220 ITR 100 (GAU) Master Construction Private Limited v. State of Orissa AIR 1966 SC 1047 (SC) In this case , The Hon ble Supreme Court in context of Rule 83 of the Orissa Sales Tax Act (similar to section 154 of the ITA) had held that arithmetical mistake was a mistake of calculation; a clerical mistake was a mistake in typing or writing. Further, an error apparent on the face of record does not includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t features of the scheme were examined and it was noticed that the scheme formulated by the Government of Andhra Pradesh was admissible only after the commencement of production. In Income-tax matters, one has to examine the nature of the item in question, which would depend on the facts of each case. In the present case, we are concerned with power subsidy whereas in the case of CIT vs. Ponni Sugars Chemicals Ltd. Ors. (2008) 219 CTR (SC) 105 : (2008) 13 DTR (SC) 1 : (2008) 306 ITR 392 (SC), the subsidy given by the Government was for repaying loans. Therefore, in each case, one has to examine the nature of subsidy. This exercise cannot be undertaken under s. 154 of the Act. There is one more reason why s. 154 in the present case was not invokable by the Department. Originally, the Commissioner of Income-tax, while passing orders under s. 264 of the Act on 30th April, 1997, had taken the view that the subsidy in question was a capital receipt not taxable under the Act. After the judgment of this Court in Sahney Steel Press Works Ltd. (supra), the Commissioner of Income-tax has taken the view that the subsidy in question was a revenue receipt. Therefore, in our view, the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with subsidy linked to loan repayment whereas the present case deals with a subsidy for setting up an industry in the backward area. Therefore, in each case, one has to examine the nature of the subsidy. The judgment of this Court in Sahney Steel Press Works Ltd. (supra) was on its own facts ; so also, the judgment of this Court in Ponni Sugars Chemicals Ltd. (supra). The nature of the subsidies in each of the three cases is separate and distinct. There is no strait jacket principle of distinguishing a capital receipt from a revenue receipt. It depends upon the circumstances of each case. As stated above, in Sahney Steel Press Works Ltd. Etc. (supra), this Court has observed that the production incentive scheme is different from the scheme giving subsidy for setting up industries in backward areas. In the circumstances, the present case is an example of change of opinion. Therefore, the Department has erred in invoking s. 154 of the Act. CIT vs. Keshri Metal (P) Ltd. (1999) 237 ITR 165 (SC) Rectification Mistake apparent from record from record Computation of book profits under s. 115J Current depreciation and unabsorbed depreciation allowed for purposes of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time (asst. yr. 1997-98). For the above reasons, on facts and circumstances of this case, s. 154 was not applicable. Dinosaur Steels Ltd. vs. Jt. CIT [Tax Case (Appeal) No. 1927 of 2006, dt. 18th July, 2006] set aside. It was observed that the appellant had taken government loans and the same was to be used for the purpose of super market, godown construction, maintenance and Expansion of head office, which was considered to be of enduring nature and therefore the expenditure was treated as capital expenditure not allowable u/s 36(iii) of the Act. The loans were used for the purpose for the purpose of the working capital and were deposited in the overdraft account of the appellant which reduced the amount of overdraft. The utilization of the funds was for the working capital and therefore the interest paid on such loans was an allowable revenue expenditure. Your kind attention is invited towards page 4 of CIT(A) order in AY 2016-17 in which it was clearly stated that the funds were not used in acquisition of any capital assets but was deposited in the overdraft account. Similar facts are there in AY 2017-18 which is evident from page 2 and page 4 of order of CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Udaipur and outside. Except those activities, the society is not carried out any other activities. In this bunch of appeal the appeal are mainly challenged on account of validity of re-opening, claim of deduction u/s. 80P(2)(d) of the Act and disallowance of interest u/s. 36(1)(iii) of the Act. 9.1 For the lead case the fact of the case is that the Assessee filed it return of income on 25.09.2015 declaring a total income of Rs 51,80,877/- after claiming a deduction of Rs 36,46,906/- and making disallowance of Rs. 18,95,50,72/-. The assessee filed filed a rectification application to the CPC for allowing of deduction u/s 80P(2)(d) of Rs. 2,26,01,978/- as claimed in the return but the same was rejected. Thereafter the assessee filed an application u/s 154 of the IT Act to the ld. AO but the same was also rejected by him and the same was allowed by the ld. CIT(A) but again the notice of 154 of the Act and the same was not considered by the ld. CIT(A) on the same issue. Thus, it is not imperative repeat the facts but it is notable that the AO did not accept the claim of the assessee and disallowed the claim u/s 80P(2)(d) in respect of the interest derived by the Co-operative soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rimary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank. The circular then stated that in the light of this inclusion - to Section 80P by way of introduction of Section 80P(4), the exemption could not be availed of by the banks invested in Regional Rural Banks. This Court is of the opinion that the revenue's contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for the purposes of Income Tax Act. In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all the contingent consequences that flow from it. For the above reasons, this court is of the opinion that there is no substantial question of law involved in the present appeal. The appeal is, therefore, dismissed. Taking into consideration the present facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he circular it is extracted below; CIRCULAR NO. 6/2010 IF NO. 173(3)/44/2009-IT (A-1)] DATED 20-9-2010. 1. Section 80P of the Income-tax Act, 1961 provides for a deduction from the income of cooperative societies referred to in that section. 2. As Regional Rural Banks (RRB) are basically corporate entities (and not cooperative societies), they were considered to be not eligible for deduction under section 80P when the section was originally introduced However, as section 22 of the Regional Rural Bank Act provides that a RRB shall be deemed to be cooperative society for the purposes of the Income-tax Act, 1961, in order to make such banks eligible for deduction under section 80P. CBDT issued a beneficial Circular No. 319 dated 11-1- 1982, which stated that for the purpose of section 80P, a Regional Rural Bank shall be deemed to be a cooperative society. 10 ITA Nos. 163/Jodh/2019 ACIT vs. M/s Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd. 3. Section 80P was amended by the Finance Act, 2006, with effect from 1-4-2007 introducing sub-section (4), which laid down specifically that the provisions of section 80P will not apply to any cooperative bank other than a Primary Agricultural Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16-17), therefore, following the decision of ITAT, Jodhpur referred above, the AO is directed to allow deduction of Rs. 2,23,46,187/- u/s 80P(2)(d). In the result, the appeal is allowed. As facts of the assessment year 2014-15 are similar of the facts of the assessment year 2016-17 under appeal, therefore, the following decision ITAT Jodhpur referred above which is also confirmed by the Hon ble High Court. Based on these observations, we do not find any infirmity in the order of the ld. CIT(A) and therefore, the appeal filed by the Revenue stands dismissed. In the result, the appeal of the Revenue is dismissed. Hence, taking the consistent view on the matter, we find that the issue raised by the assessee is squarely covered as per the judicial precedent discussed hereinabove so far as the allowability of deduction of interest u/s. 80P(2)(d) of the Act and thus, based on these observations the ground no. 2 3 for A. Y. 2013-14, 2015-16, 2016-17, 2017-18 ground no. 1 2 in A. Y. 2018-19 and ground no. 1,2 3 for A. Y. 2020-21 is allowed. Since we have allowed the appeal of the assessee on merits ground no. 1 raised in the A. Y. 2013-14, 2015-16 2016-17 2017-18 challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X
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